HomeMy WebLinkAboutAgenda Report - March 15, 2006 K-01AGENDA ITEM VWI
AgEhL CITY OF LODI
W. COUNCIL COMMUNICATION
AGENDA TITLE: Mid -year budget review and resolution to revise 2005-06 budget appropriations
MEETING DATE: March 15,2006
PREPARED B Y James R. Krueger, Deputy City Manager
RECOMMENDED ACTION: That City Council approve the mid -year budget adjustments and a
resolution revising the 2005-06 budget appropriations.
BACKGROUND INFORMATION: The City Council adopted the Budgetfor Fiscal Year 2005-06 in
June, 2005. Assumptions made related to the revenues to be
received and expenditures to be incurred have not resulted in any
material differences between the projected fund balances for any of
the City funds in comparison to the amounts as approved in the
adopted City Budget. However, there are several funds for which adjustments to both the revenue
estimates and budgeted expenditures should be made in order to more appropriately reflect the projected
operating results for Fiscal Year 2005-06. Following are the recommended adjustments and a brief
explanation of the reasons for each of the adjustments:
1) General Fund -Total budgeted expenditures will be decreased by $500,000 from the amount
stated in the adopted budget to reflect the reduction in the transfer amount from the Electric Utility
Fund for services provided. This budget adjustmentwill not affect the ending fund balance
because there are sufficient cost savings to offset the reduced revenues. The expected ending
fund balance will be $1,558,663 (a slight decrease from the amount in the adopted budget of
$1,565,000). Following are recommended adjustments:
Revenues
Decrease Tax Revenues (Electric In -lieu Franchise) (500,000)
Increase Tax Revenues (Sales Taxes) 500,000
Appropriations
Increase Fire Department (Personnel Services) 261,000
Increase Non -Departmental 101,000
Decrease Transfers to other Funds (361,000)
2) Electric Utility Fund- Budgeted expenditures should be increased by a net amount of $543,000
from the amount stated in the adopted budget. This is a netting of three different items, which
include an estimated bulk power purchase cost increase of $2,867,000, a reduction of the transfer
APPROVED: l
Blair King, City Manage
to the General Fund of $500,000 and a reduction in other operating costs of $1,824,000. The
increased revenues from the rate increase approved by City Council in November 2005 will
provide approximately $5,000,000 in additional revenues and the net result is that the Fund
Balance is expected to be $3,340,000 (the ending fund balance in the adopted budget is a deficit
of $2,198,000). Following are recommended adjustments:
Revenues
Increase Sales to customers $5,000,000
Appropriations
Increase Bulk Power Expense 2,953,000
Decrease Other Operating Expenses (1,995,900)
In -lieu of Transfer (decrease expenses) ( 500.0001
Net Increase in Ending Balance $5,457,100
3) Water Fund- Budgeted expenditures should be increased by $52,800 from the amount stated in
the budget to pay for the cost of services transfer from the General Fund Departments (mostly
Public Works) that had been originally scheduled to be paid from the Street Fund. This
adjustment is a reallocation of the cost of services transfer from the Street Fund to the Water,
Wastewater and Capital Outlay funds. This will result in a reduction of the estimated ending fund
balance for this fund.
Appropriations
Increase Transfer to other Funds $ 52,800
Net Decrease in Ending Balance $ 52,800
4) Wastewater Fund- Budgeted expenditures should be increased by $30,800 to pay for the cost of
services transfer from the General Fund Departments (mostly Public Works) that had been
originally scheduled to be paid from the Street Fund. This adjustment is a reallocation of the cost
of services transfer from the Street Fund to the Water, Wastewater and Capital Outlayfunds. This
will result in a reduction of the estimated ending fund balance for this fund.
Appropriations
Increase Transfer to other Funds $ 30,800
Net Decrease in Ending Balance $ 30,800
5) Capital Outlay Fund- Budgeted expenditures should be increased by $139,100 to pay for the
cost of services transfer from the General Fund Departments (mostly Public Works) that had been
originally scheduled to be paid from the Street Fund. This adjustment is a reallocation of the cost
of services transfer from the Street Fund to the Water, Wastewater and Capital Outlay funds. This
will result in a reduction of the estimated ending fund balance for this fund.
Appropriations
Increase Transfer to other Funds $ 139,100
Net Decrease in Ending Balance $ 139,100
6) Street Fund- Budgeted expenditures should be decreased by $222,700 to reflect the relocation of
the cost of services transfers to the Water, Wastewater and Capital Outlay funds. This will result
in an increase in the estimated ending fund balancefor this fund.
Appropriations
Decrease Transfer to other Funds $ 222,700
Net Increase in Ending Balance $ 222,700
Quarterly Financial Reportfor December 31,2005.
The following highlights are excerpts and comments from the Quarterly Financial Report attached as
ExhibitA
Fund Balances
Ending Fund Balances June 30,2006
Budget FYE 2006 Projected 6130106 Variance
General Fund
1,565,087
1,558,663
(6,424)
Library Fund
618,543
548,749
(69,794)
Street Fund
6,254,710
7,622,700
1,367,990
Transportation Development Act Fund
75,299
109,310
34,011
Community Develepment Block Grant Fund
0
0
0
Police Special Revenue Fund
276,876
346,646
69,770
Capital Outlay Fund
4,999,373
6,631,469
1,632,096
Vehicle/Equipment Replacement Fund
98,500
209,816
111,316
Debt Service Fund
0
Water Fund
2,285,754
3,120,041
834,287
Wastewater Fund
1,048,718
1,070,366
21,648
Electric Fund
(2,187,758)
3,269,270
5,457,028
Transit Fund
6,468
236,523
230,055
Community Development Fund
0
365,728
365,728
Benefits Fund
248,695
240,897
(7,798)
Self Insurance Fund
2,263,767
3,548,632
1,284,865
Trust/Agency Fund
1,231,086
1,236,501
5,415
Total All Funds
Revenues and Expenditures
General Fund:
• Tax Revenues- Sales Tax revenues are projected to be approximately $640,000 more than
budgeted, Property taxes will be $400,000 less than budgeted and other taxes will be $143,000
more than budgeted. Property taxes and Sales taxes were estimated using prior year actual
results, which have proven to be unrepresentative of current year projected results. The transfer
of in -lieu taxes has been reduced to reflect the need to balance the Electric Utility budget.
• Service Chames- Fees charged for engineering are projected to be $372,000 less than estimated
due to less than expected engineering design work on development projects.
Fire Department Overtime -The Fire Department has expended a greater percentage of its
overtime budget than anticipated. As of the end of January, Fire Operations had spent 99% of its
overtime budget. The Fire Department points out that according to the labor agreement with the
Fire Association, up to two firefighters may take vacation per shift. 16 firefighters are the minimum
needed per shift. The city is authorized for 17 per shift. Iftwo firefighters take vacation, the shift
is short one firefighter, consequently, the need for overtime. It is recommended that the budget
be adjusted to reflect the overtime budget variance. Management wilI review with the Fire
Department administration methods to reduce planned overtime.
Non -Departmental- The projected needs for Transfers to the Community Development Fund and
to the Self Insurancefunds are less than what was budgeted. Better than expected revenues
received in the Community Development Fund and less than expected expenditures for General
Liability and Workers Compensation are reflected in a net reduction of transfers to other funds of
$361,000. Projected increases in utility costs are reflected in the proposed budget adjustment of
$101,000.
• Expenditures in a//other departments- All other departments are projected to have savings in
personnel services costs due to lower than expected health insurance and work force attrition.
Departments with greater than expected attrition may need to fill some of these positions. Hardest
hit are the Public Works fleet services, Finance Customer Service and the Police Department.
Electric Fund:
• Rate Increase -The adjustment of electric rates to reflect the increase in bulk power purchase
costs is expected to allow for additional revenues of $5,000,000 in the current year and
approximately $10,000,000 in subsequent years.
• Operating expenses- Due to position vacancies in several divisions and savings in services and
materials it is expected that there will be approximately $2,000,000 projected savings in operating
expenses. Bulk power costs are projected to exceed the amount budgeted by $2,930,000.
Street Fund:
• Fund Balance -The beginning fund balance is more than budgeted as a result of timing
differences in capital expenditures in relation to the funding of these projects. Consequentlythe
ending balance is $1,367,990 more than expected in comparison to the budgeted amount.
Capital Outlav Fund:
• Fund Balance -The beginning fund balance is $1,885,971 more than budgeted as a result of
timing differences in capital expenditures in relation to the funding of these projects. Consequently
the ending balance is projected to be $1,632,096 more than expected in comparison to the
budgeted amount.
Water Fund:
• Fund Balance -The ending balance is projected to be $834,287 more than budgeted primarily as
a result of a better than expected balance at the beginning of the fiscal year.
Communitv Development Fund:
• Revenues- Projected revenues for permit fees and planning fees show better than expected
building activity in fiscal year 2005-06. As a result of this and some budget savings in personnel
services the transfer to this fund from the General Fund will be reduced and the ending fund
balance is expected to be $365,728.
Self Insurance:
Revenues- The revenues in this fund come from transfers made from all operating funds. The
amounts transferred from operating funds has been adjusted to reflect that the projected claims
experience has been better than expected in comparison with the budget expectations.
Expenditures -Claims experience for workers compensation and general liability have been much
better than expected and is projected to result in expenditures savings of more than $1,080,000.
Fund Balance -As a result of the better than expected claims experience the fund balance is
projected to be approximately $1,285,000 more than the amount budgeted.
Position Control
The City Manager provided the Council with a listing of 29 positions to be cut or held vacant during the
course of the fiscal year. At the time the budget was adopted the Council was informed if this list should
change the Council would be consulted. One of the positions listed to remain vacant is a police
lieutenant position. The Police Department is requesting this position be filled. The Police Department
has achieved a $346,000 salary savings beyond the budgeted salary savings. It is the Manager's
intention to fill the position. Also, the Manager anticipates filling a vehicle mechanic position in order to
address a work back log.
Continued Monitoring
Staff will continue to monitor revenues and expenditures through the end of the fiscal year and update
the projected fund balances. The projected fund balanceswill be used as the budgeted beginning fund
balances for fiscal year 2006-07. The projected expenditures for fiscal year 2005-06 will be used as the
baseline amount to establish the budgeted expenditures for all departments.
FISCAL IMPACT: The fiscal effects of the adjustments are incorporated within the explanations above.
FUNDING:
None required.
1&6es R. Krueger, Deputy City Manager